Midsize Employers

Are Still Required To Do Sec. 6056 Reporting in 2015, IRS Says

Even though midsize employers (those with 50-99 employees) have been provided with another year to comply with the Patient Protection and Affordable Care Act’s (ACA’s) employer mandate, they will still be required to complete information reporting under Sec. 6056 in 2015, according to speakers at an August 14 IRS webinar entitled IRC Section 6056: Information Reporting by Applicable Large Employers on Employer-Sponsored Health Coverage. Speaker Stephen Tackney, of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), said, “This is very important. Even though there is relief for employers with 50 to 99 full-time employees from [the provisions of] Sec. 4980H, they still have to do the reporting under Sec. 6056 on the offers of coverage they make to employees.”

Background. Applicable large employers (ALE) that are subject to the ACA’s shared responsibility rules regarding health coverage under Code Sec. 4980H must file an information return with the IRS that reports, for each employee who was a full-time employee for one or more months during the calendar year, certain information about the health care coverage the employer offered to that employee (or, if applicable, that the employer did not offer health care coverage to that employee). The IRS requires that a Sec. 6056 information return be filed for and furnished to each full-time employee of the ALE, noted the speakers. The information gathered under Sec. 6056 will be used to assist the IRS in administering the employer shared responsibility provisions under Sec. 4980H and to determine an employee’s eligibility for a premium tax credit.

Midsize employers. Final regulations issued on March 10, 2014, provided transition relief to ALEs with less than 100 employees. Midsize employers will not be subject to any shared responsibility payments under the ACA until 2016. However, these employers are still required to file and furnish under Sec. 6056, the speakers emphasized. On the Sec. 6056 transmittal form in 2015, midsize employers will be required to certify they that met the eligibility requirements for this transition relief—meaning that they did not reduce their workforce or the health coverage provided to employees after the transition relief was announced.

According to Tackney, “If your reporting actually shows that you did not offer affordable coverage, and one or more of your full time employees turned down that offer of unaffordable coverage, and received a premium tax credit, you will not have 4980H liability, but you will need to do the reporting because that will help us administer the premium tax credit and give the employees some information that the employee needs to determine their own eligibility for the premium tax credit. So, that reporting is still useful and is still going to be required.”

Good faith effort. In 2015, all ALEs, regardless of size, that show a good faith effort in complying with the information reporting requirements under Sec. 6056 will not be liable for any accuracy related penalties, speakers said. However, the reasonable cause standards do apply under normal rules for those that fail to meet the timely reporting requirements.

“We recognize this is a new reporting regime, so as long as you make a good faith effort for that first year, there will be no penalties in 2015,” concluded Tackney. “We are all going to be coming into compliance with this provision together and learning how it is going to operate.”